Dividend Stocks

If You Can Only Buy One Blue-Chip Stock in May, It Better Be One of These 3 Names

Blue-chip stocks offer more stability than corporations that are oriented toward growth. Many of these firms pay dividends and reward shareholders with stock buybacks. 

Also, blue-chip stocks appeal to investors who want to buy and hold solid companies. While you can time the market, it is often time in the market that leads to the highest returns. With that in mind, these are some of the top blue-chip stocks to consider in May.

Walmart (WMT)

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Walmart (NYSE:WMT) has established itself as a top retailer for people who want affordable products. Also, the company is the largest grocer in the world. People will continue to shop at Walmart during any economic cycle, and the company is perfectly capable of delivering gains during bullish cycles.

Recently, the retailer impressed investors with 6.0% year-over-year (YOY) revenue growth in Q1 of fiscal year 2025. Global e-commerce sales and the company’s advertising business achieved YOY growth rates of 21% and 24%, respectively. Adjusted earnings per share sprang up by 22.4% YOY.

The stock has outperformed the broader market with a 23% year-to-date (YTD) gain. Shares are up by 93% over the past five years and come with a 1.27% yield. Walmart normally hasn’t hiked its dividend by much, but the company raised its dividend by an impressive 9% earlier this year. It marked the company’s 51st consecutive year of dividend hikes. Impressively, Walmart reported $1.1 billion of its stock this quarter.

Caterpillar (CAT)

Caterpillar (CAT) excavator vehicle backlit by sunset

Source: Shutterstock

Caterpillar (NYSE:CAT) has offered strong financials in various economic cycles. The construction equipment company was founded in 1925 and has been delivering impressive returns for many years. It’s beaten the market in recent years. The stock is up by 19% YTD and has soared by 191% over the past five years.

Construction is a cyclical business that tends to perform better as interest rates drop. If the Fed decides to lower the market rate later this year, the construction industry should see a boom.

Revenue was flat for the firm in Q1 of 2024 while the profit per share came to $5.75 per share. That’s a notable increase from the profit per share of $3.74 recorded in Q1 of 2023. Profit margin expansion has compensated for flat sales. Additionally, Caterpillar invested $4.5 billion into stock buybacks and distributed a quarterly dividend of $1.30 per share. Currently, shares yield 1.49% and trade at a 16 P/E ratio.

American Express (AXP)

an American Express (AXP) credit card sticking out of someone's pocket

Source: Shutterstock

American Express (NYSE:AXP) trades at a reasonable 20 P/E ratio which is much lower than other credit and debit card giants. These plastic cards remain popular among young consumers and offer convenience and rewards that make them hard to ignore. 

Some fintech firms are doing better than others, and it seems like American Express is gaining market share from the Gen Z and Millennial cohorts. The corporation reported that 60% of new accounts were from those generations. This detail came amid the company’s impressive Q1 of 2024 earnings report. Revenue increased by 11% YOY while net income rallied by 34% YOY.

The solid earnings report sparked further gains for the stock, as it’s now up by 26% YTD, And, shares have more than doubled over the past five years and come with a 1.18% yield. Dividend growth investors will appreciate the American Express has maintained an annualized dividend growth rate of 10.51% over the past decade.

On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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